The head of the United Nation’s labor agency commends how Germany handles economic crisis amidst coronavirus pandemic.
Guy Ryder, the director-general of the International Labour Organization (ILO), said that Germany’s initiatives to address its employment issue must serve as a model to the world. According to him, other countries should observe how Germany deals with the economic fallout of the coronavirus outbreak.
He told CNBC that countries like Germany were able to keep their citizens working during the 2008-2009 global financial crisis. They “enabled the continuity of processes and of institutions” and recovered quickly from the downturn.
He added that Germany’s “Kurzarbeit” or “short-time work" program during the current pandemic set an example as to how countries can address economic crisis.
Germany sent workers home and cut their working hours. However, the government pays around two-thirds of their salary.
The country applied the scheme in the last crisis. The previous event recorded an average of 1.1 million people who suffered from Germany’s economic contraction in 2009. The German government spent around 10 billion euros or $10.9 billion. Still, the unemployment rate remained at 7.6%, lower than it was in 2008, by the end of 2020.
“Germany came out all that much better and I think these are lessons which I think apply pretty directly to what we’re living through now,” said Ryder.
Germany began allowing certain businesses to resume operations after imposing a period of lockdown to curb the outbreak.
Latest data from Johns Hopkins University showed 163,009 confirmed cases of COVID-19 in Germany and 6,623 deaths.
Informal workers to lose income
The ILO said that 1.6 billion workers or almost half of the global workforce in the informal sector could lose their jobs due to the pandemic.
The global decline in working hours in the second quarter may become “significantly worse” than its previous estimate. This is because extended lockdown measures forced businesses to shut.
According to the United Nations’ labor agency, people in informal work struggled with a 60% decline in income in the first month of the coronavirus crisis. Meanwhile, those in informal work in Africa and the Americas saw the biggest drop, of 81%, based on the estimates.
Meanwhile, in the US, the Department of Labor reported that an additional 4.4 million people sought financial relief by filing for unemployment benefits in the US in the week ending April 18.
Lack of international cooperation
Meanwhile, the UN labor agency now predicts a 10.5% decline in working hours worldwide in the second quarter. This is the equivalent of 305 million full-time workers. Data shows an increase from its previous estimate of a 6.7% drop, or 195 million workers.
According to Ryder, the lack of international cooperation between countries is an issue when it comes to addressing the economic impact of the coronavirus.
“We need to see the G-20 do more, we need to see member states having the UN in the position to do more — it’s not too late but really the urgency is extraordinary,” he said.
